U.K. Bans Crypto Derivatives for Crypto Investors
The Financial Conduct Authority (FCA) in the U.K. recently announced a ban on the selling of cryptocurrency derivatives products to retail crypto investors. The ban is expected to take effect on January 6, 2021.
According to reports, the ban aims to save customers £53 million (about $68.9 million) in losses incurred annually. The ban prevents any local company from selling, marketing, and distributing any derivatives. These will include contracts for difference, futures, options, and exchange-traded notes (ENTs).
Sheldon Mills, the current interim executive director of strategy and competition at the FCA, commented:
“Significant price volatility, combined with the inherent difficulties of valuing crypto assets reliably, places retail consumers at a high risk of suffering losses from trading crypto-derivatives. We have evidence of this happening on a significant scale. The ban provides an appropriate level of protection.”
In their announcement, FCA explained that cryptocurrencies are “ill-suited for retail consumers. This is due to the harm they pose.” The authorities further explained that the ban is intended to protect customers. Customers may lack an understanding of how derivatives are traded. They also lack a “legitimate investment needed to invest in these products.”
After the announcement, many companies offering these services have seen tremendous losses.
A Surge in Bitcoin Wallets in China
The crypto market in China is stirring conversation following reports of about 22,000 new Bitcoin wallets in recent days.
Based on reports, China has recorded an increased number of daily Bitcoin wallets. This is following recent crypto campaigns by authorities. So far, the country has recorded high numbers of new Bitcoin wallets, with the highest being 22000 new entries in a day.
Cole Garner, an analyst, associated the surge to China promoting Bitcoin, Ethereum, and DeFi on a T.V. segment. According to him, new addresses are strong indicators for positive price action in the coming days. Garner tweeted:
“Bottom line — this news is incredibly bullish and appears to have fundamental confirmation. I definitely expect more shakeouts and sideways price action moving forward. But I’m fundamentally bullish on $BTC. And I think hodlers will be grinning by Christmas.”
While there is no clear relation linking the campaigns to the surged number of wallets, many crypto investors are excited by this new development.
John McAfee Arrested with Multiple Charges
The office of the US Department of Justice (DOJ) and the U.S. Securities and Exchange Commission (SEC) independently announced earlier this week the arrest of John McAfee. He was indicted for tax evasion and fraudulently pumping tokens. McAfee was arrested in Spain and is waiting to be extradited.
The SEC is charging McAfee fraudulent pumping initial coin offerings (ICOs). He was charged together with his bodyguard Jimmy Watson Jr. This was allegedly done between November 2017 to the early months of 2018. During this period, he failed to disclose that he received compensation for ICO companies to promote their tokens. According to the authorities, McAfee leveraged his fame to make more than $23.1 million U.S. dollars (‘USD’). He received an undisclosed compensation by recommending at least seven ‘initial coin offerings’ or ICOs to his Twitter followers. McAfee raised at least approximately $41 million. He made at least $23.2 million in secret compensation for his touts.
SEC claims that McAfee lied to investors that he was not receiving any compensation for his participation. According to the SEC, McAfee was paid more than $11.6 million worth of Bitcoin and Ethereum. He also received an additional $11.5 million worth of promoted tokens. McAfee allegedly paid a third party to pump these tokens to crypto encourage investors.
On the other charge, the DOJ explained that McAfee failed to file tax returns from 2014 to 2018. McAfee allegedly evaded his tax liability. This is by directing his income to bank accounts and cryptocurrency exchange accounts in the names of nominees.
The DOJ also claims that McAfee tried to evade the IRS by concealing assets, including a yacht, a vehicle, and real property. If convicted for the tax evasion counts, McAfee faces a maximum sentence of five years in prison. He also faces another one year in jail on each count for failure to file a tax return.
Japan Messaging Giant Introduce Crypto Lending Services
According to the announcement, the new lending service will allow customers to lend Bitcoin, Litecoin, Bitcoin Cash, Ethereum, and Ripple to the company’s Bitmax subsidiary. Line lenders will be able to yield off of the assets borrowed in the form of a rental fee using this new lending service, a common trend in 2020.
The firm has been actively participating in the crypto space. Back in 2018, it launched its crypto exchange called LVC with over 30 digital assets. The company has also created the Line blockchain and Bitmax.